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Construction Defects May Impact Your Property Taxes

By Gary Smith
02/10/2021
Construction Defects May Impact Your Property Taxes

Construction defects not only impact a property owner because of the cost to repair the defect but also could have an impact on that property’s taxes.

How a Construction Defect Could Impact Property Taxes

A construction defect is a condition in the property that reduces the value of the home. Oftentimes, these defects are not obvious and do not become apparent until years after the property is built. Construction defects are often the result of poor workmanship or the use of inferior materials. Sometimes they arise from a combination of factors such as poor site selection and planning, improper soil analysis and preparation, or structural engineering issues.

Anything that impacts the property value will impact the property taxes, since part of the tax equation includes the assessed value on the property. A construction defect could be used to lower the value during a property tax appeal process, as it would impact the value of the building or residence.

Property taxes are based on a formula, which is Assessment x Multiplier (minus Exemption) x Tax Rate. The assessment is the portion of the tax bill that could be impacted by a construction defect and is also the part of the property tax bill that can be appealed.

The most obvious reason a construction defect might impact a property’s taxes is that the defect itself negatively impacts the value of the property, and that negative impact will continue until the defect is repaired. Defects are not something to ignore until selling the property, as most property buyers will have an inspection done before the sale is final.

In addition, if left unfixed, a defect could continue to diminish the value of the property, impacting the owner’s ability to sell or lease the space.

How to Appeal a Property’s Assessment

If a property has a construction defect that is not reflected in the property’s assessment, that could be the basis of the appeal. However, each municipality has specific deadlines for its appeals process, so it is only within that timeframe that a property owner may file an appeal.

Appeals can be filed online at the Cook County Assessor’s Office website. Documents can be attached, such as documentation that outlines information about the construction defect as well as photos of the construction defect.